Updated from 12:03 p.m. EDT

Financial stocks finished mostly higher Wednesday after a boutique firm raised its rating on the banking industry, arguing nonperforming assets will peak at the end of this year.

Bank of America ( BAC) and Citigroup ( C) rallied after Fox-Pitt Kelton Cochran Caronia Waller upped its rating on the banking industry to market weight from underweight, the first time the firm has raised its rating on U.S. banks since 2004.

Bank of America made headlines of its own. The bank's annual shareholder meeting was contentious as some of BofA's biggest shareholders have been calling for Chairman and CEO Ken Lewis to resign for his part in the acquisition of Merrill Lynch and the plummet in share price.

The bank's board of directors appeared set to win re-election by "a wide margin," but Lewis still was in danger of losing his chairman title, according to a person familiar with the vote counting.

Preliminary results are not yet available for the other proposals, including another prominent goal of activist groups to separate the roles of chairman and CEO. Results expected to be officially released by the end of Wednesday.

BofA shares rose 6.5% to $8.68 as the meeting was held in Charlotte, N.C., although the stock is down 38% in 2009 and 77% over the past year.

Morgan Stanley ( MS) shares climbed 9.4% after its own annual shareholder meeting. John Mack's retained his CEO title, after some scrutiny due to the company's second straight quarterly loss and dividend cut, at a time when many of its financial peers were notching quarterly profits.

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